Creating peace of mind through honest and committed management.

August 31, 2015
REIT Issuer
Ichigo Real Estate Investment Corporation (8975)
1-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo
Representative: Yoshihiro Takatsuka, Executive Director
Asset Management Company
Ichigo Real Estate Investment Advisors Co., Ltd.
Representative: Wataru Orii, President & Representative Statutory Executive Officer
Inquiries: Hiroto Tajitsu, Statutory Executive Officer, Head of Administration
Tel: 03-3502-4891

Asset Acquisition
Ichigo Real Estate Investment Advisors Co., Ltd. (“IRE”), the asset management company of
Ichigo Real Estate Investment Corporation (“Ichigo REIT”), has decided to acquire the Ichigo
Kawasaki Building.
I. Acquisition Summary
Asset Name1
Asset Type
Date Built
Legal Form of Asset
Appraisal Value2
Acquisition Price3
SellerContract Date
Closing Date (expected)
Financing Method
Settlement Method

Ichigo Kawasaki Building
Office (O-71)
September 1990
Trust beneficiary interest in real estate (juekiken)
1,910,000,000 yen
1,750,000,000 yen
Kawasaki Holdings GK
August 31, 2015
September 30, 2015
Cash-on-hand and borrowing (Expected)
Lump-sum payment

1

The building’s current name is NKF Kawasaki Building, but the building’s name will be changed
to Ichigo Kawasaki Building at acquisition.
2
Appraisal value is as of August 1, 2015.
3
Acquisition price excludes incidental expenses such as property, city planning, and consumption
taxes.
II. Acquisition Rationale
In the current Stage IV Increase Size & Scale (November 2014 – October 2015) of its
multi-year growth strategy, Ichigo REIT is increasing dividends and growing its geographicallydiversified portfolio of mid-size offices, an asset class that offers both stability of returns andupside potential.
Today’s acquisition follows Ichigo REIT’s July 28, 2015 acquisitions in being earnings
accretive for Ichigo REIT shareholders, and will further drive shareholder value by making fullDisclaimer: This translation is for informational purpose only. If there is any discrepancy between the Japanese version and the English translation, the Japanese version shallprevail. This document is an English translation of a press release for public announcement regarding the asset acquisition by Ichigo Investment Corporation, and has not been
prepared for the purpose of solicitation of investment. We caution investors to refer to the Investment Corporation's prospectus and notice of amendments thereto, if any,
without fail and to undertake investment at their own decision and responsibility.

1use of Ichigo REIT’s strengths in managing and adding value to office assets.
Ichigo REIT is acquiring a high-quality asset from its sponsor Ichigo Inc. (“Ichigo”), taking
advantage of Ichigo’s asset sourcing and warehousing capability. The acquisition will befinanced by bank borrowings and cash-on-hand, and is expected to generate rental income of 92
million yen per annum.1 Once the details of the bank financing has been determined, Ichigo will
announce both those details and the full earnings per share contribution from the acquisition.
1

Rental income is the net income calculated via the direct capitalization method by Daiwa Real
Estate Appraisal Co., Ltd in its August 1, 2015 appraisal report.

III. Asset Summary
The NOI yield of the Ichigo Kawasaki Building is 6.5%, and the occupancy rate is 100% as ofJuly 31, 2015.
A. Location
The building is located in the city of Kawasaki, just south of Tokyo and north of
Yokohama. With a population of 1.4 million people, Kawasaki is one of the National
Strategic Economic Zones in Kanagawa Prefecture.
Kawasaki’s busiest commercial zone is centered on Kawasaki Station of the JR Line andKeikyu Kawasaki Station of the Keikyu Honsen Line. It is heavily populated in both day
and night, with large numbers of commercial and business venues such as shopping malls,
banks and financial institutions, and mid-sized retail and restaurants.
B. Features
This mid-size office building is a 9-minute walk from Kawasaki Station of the JR Line andKeikyu Kawasaki Station of the Keikyu Honsen Line. Companies operating nationwide
are actively seeking to establish offices in the area due to its convenient access to local
businesses operating in the area and to central Tokyo.
Restaurants and a beauty salon occupy the basement and first floors. The office floors areoccupied by business and professional services tenants such as telecommunications firms
and law offices.

Disclaimer: This translation is for informational purpose only. If there is any discrepancy between the Japanese version and the English translation, the Japanese version shallprevail. This document is an English translation of a press release for the public announcement regarding the asset acquisition by Ichigo Real Estate Investment
Corporation, and has not been prepared for the purpose of solicitation of investment. We caution investors to refer to Ichigo REIT’s prospectus and notice of
amendments thereto, if any, without fail and to undertake investment at their own decision and responsibility.

2

C. Property Photos and Location

Disclaimer: This translation is for informational purpose only. If there is any discrepancy between the Japanese version and the English translation, the Japanese version shallprevail. This document is an English translation of a press release for the public announcement regarding the asset acquisition by Ichigo Real Estate Investment
Corporation, and has not been prepared for the purpose of solicitation of investment. We caution investors to refer to Ichigo REIT’s prospectus and notice of
amendments thereto, if any, without fail and to undertake investment at their own decision and responsibility.

3

Asset Overview
Asset Name

Ichigo Kawasaki Building

Legal Form of Asset

Trust beneficiary interest in real estate (juekiken)

TrusteeMizuho Trust & Banking Co., Ltd.

Period of Trust Contract

May 29, 2012 - September 30, 2025 (Expected)

Location

1-2 Higashi Tamachi, Kawasaki-ku, Kawasaki City, Kanagawa Prefecture

Land

Building

Property Right

Freehold

Size

670.96 m2

ZoningCommercial

Coverage Ratio/Floor
Area Ratio

80%/800%

Property Right

Freehold

ZoningParking, Office

Structure

Steel B2F/9F

Total Floor Area

5,620.96 m2

Construction Date

September 27, 1990

Appraiser

Daiwa Real Estate Appraisal Co., Ltd.

Appraisal Value

1,910,000,000 yen

Appraisal Date

August 1, 2015

Value by Direct Capitalization Method

1,970,000,000 yen

Architect1

Takenaka Corporation

1

BuilderTakenaka Corporation

Structural Strength Assessor1
1

Takenaka Corporation

Inspection Agency

City of Kawasaki

PML (Assessor)

3.85% (Sompo Japan Nipponkoa Risk Management Inc.)

Collateral

TBD
Rent Overview (as of July 31, 2015)

Number of Tenants

15

Monthly Rental Income

11,938 thousand yen

Deposit

98,903 thousand yen

Leasable Space

3,665.34 m2

Leased Space

3,665.34 m2

Occupancy

100%

Property Management Company

TBD

Master Lease Company

TBD

Assumed NOI (NOI yield)

2

114 million yen (6.5%)
Special Items

1.

Part of a steel door, a fence, and an exterior board encroach the western neighbor. A memorandum of understanding
exists with the neighbor for the two parties to cooperate when these require maintenance and to allow the owner toenter the land owned by the neighbor for such purpose.

Disclaimer: This translation is for informational purpose only. If there is any discrepancy between the Japanese version and the English translation, the Japanese version shallprevail. This document is an English translation of a press release for the public announcement regarding the asset acquisition by Ichigo Real Estate Investment
Corporation, and has not been prepared for the purpose of solicitation of investment. We caution investors to refer to Ichigo REIT’s prospectus and notice of
amendments thereto, if any, without fail and to undertake investment at their own decision and responsibility.

4

2.

A tenant signboard of a tenant of the building has not been approved of outdoor advertising, but the tenant has been
notified to submit an application for approval.

1

The names of the architect, builder, structural strength assessor, and inspection agency are those of when the building wasbuilt.
2
NOI is the net operating income used by the appraiser in determining direct capitalization. NOI yield is calculated by
dividing NOI by Acquisition Price. Amounts less than a million are rounded off.

Disclaimer: This translation is for informational purpose only. If there is any discrepancy between the Japanese version and the English translation, the Japanese version shallprevail. This document is an English translation of a press release for the public announcement regarding the asset acquisition by Ichigo Real Estate Investment
Corporation, and has not been prepared for the purpose of solicitation of investment. We caution investors to refer to Ichigo REIT’s prospectus and notice of
amendments thereto, if any, without fail and to undertake investment at their own decision and responsibility.

5Appraisal Overview
Name

Ichigo Kawasaki Building

Appraisal Value

1,910,000,000 yen

Appraiser

Daiwa Real Estate Appraisal Co., Ltd.

Appraisal Date

August 1, 2015
AmountAppraisal Value
Value by Direct Capitalization
MethodIncomeMaximum Obtainable
Rental Income
Vacancy Loss
ExpensesNote

1,910,000,000 yen

Valuation determined via both a direct capitalization
valuation and DCF valuation

1,970,000,000 yen
179,862,199 yen
189,485,128 yen
9,622,929 yen

Based on rental income, common area service income,parking lot income, and other income
Based on mid- to long-term vacancy rate

65,847,439 yen

Administrative andMaintenance Expenses

16,631,600 yen

Based on current contract rent and similar assets

Utility Expenses

25,945,218 yen

Based on similar assets and past actual amounts

Repair Expenses

3,358,416 yen

Based on engineering reports and similar assets

PM Fee2,976,691 yen

Leasing BrokerageFees

1,111,598 yen

Taxes

14,449,353 yen

Based on FY2015 actual amounts

295,390 yen

Based on the estimated amountInsurance Premiums
Other Expenses
Net Operating Income(NOI)
Income on Investmentof Deposits Received
Capital Expenditure

1,079,173 yen

Consumable goods, etc.

114,014,760 yen
2,151,195 yen

Based on 2.0% investment yield

23,515,500 yen

Based on engineering reports and similar assets

Net Profit

92,650,455 yen

Cap Rate

4.7%

Value via DCF Method

Based on expected PM fee taking past actual amounts ofsimilar assets
Based on the expected turnover rate, past actual amount, andtenant acquisition costs for similar assets

Based on transactions of similar assets and comprehensive
assessment of the asset’s location, its individual
characteristics, etc.

1,880,000,000 yen

Discount Rate

4.5%

Based on transactions of similar assets and the yields offinancial assets with the asset’s individual characteristics
taken into account

Terminal Cap Rate

4.9%

Based upon risk-adjusted NOI as of the appraisal date

Value via Cost Approach

1,730,000,000 yen

Land

71.8%

Building

28.2%
Notes

None

Disclaimer: This translation is for informational purpose only. If there is any discrepancy between the Japanese version and the English translation, the Japanese version shallprevail. This document is an English translation of a press release for the public announcement regarding the asset acquisition by Ichigo Real Estate Investment
Corporation, and has not been prepared for the purpose of solicitation of investment. We caution investors to refer to Ichigo REIT’s prospectus and notice of
amendments thereto, if any, without fail and to undertake investment at their own decision and responsibility.

6IV. Seller Profile
Name
Address
Representative

Principal Businesses

CapitalEstablishment Date
Net Assets
Total Assets
Equity Holder
Relationship with the Ichigo
REIT or Asset Manager
1

Kawasaki Holdings GK
1-1-1 Uchisaiwaicho, Chiyoda-ku, TokyoManaging Member: Ippan Shadan Hojin Star Holding
Manager: Daisuke Hagiwara
1. The acquisition, holding, and sale of trust
beneficiary interest (juekiken)
2. The holding, management, and sale of real estate
3. Other businesses relating to the aforementioned
businesses
100,000 yen
June 3, 2015
The seller did not consent to disclosure.
The seller did not consent to disclosure.
Ippan Shadan Hojin Star Holding
The Seller has no capital, personnel, or business
relationship and is not a related party as defined in the
Enforcement Ordinance of the Investment Trust andInvestment Corporation Law.1

While Kawasaki Holdings GK is not a related party as defined in the Enforcement
Ordinance of the Investment Trust and Investment Corporation Law, the acquisition
process has followed the internal rules of IRE vis-à-vis related party transactions for thefollowing reasons: First, Ichigo Inc., the 100% owner of IRE, is a related party
according to the internal rules of IRE, and Ichigo Inc. own more than half of the equityof Kawasaki Holdings GK. Second, Ichigo Estate Co., Ltd., a related party as defined in
the Enforcement Ordinance of the Investment Trust and Investment Corporation Law,has provided asset management advisory services to IRE.

V. Ownership History
Overview
Name
Relationship to
Ichigo REIT
Acquisition
Rationale
Acquisition Price
Acquisition Date

Current Owner
Kawasaki Holdings GK
Related Party as defined in theinternal rules of IRE. Pleasesee “Seller Profile” in IV.

Previous Owner
Unrelated Party―

Investment―

1,670,500,000 yen――

August 31, 2015

VI. Broker Profile
N/A

Disclaimer: This translation is for informational purpose only. If there is any discrepancy between the Japanese version and the English translation, the Japanese version shallprevail. This document is an English translation of a press release for the public announcement regarding the asset acquisition by Ichigo Real Estate Investment
Corporation, and has not been prepared for the purpose of solicitation of investment. We caution investors to refer to Ichigo REIT’s prospectus and notice of
amendments thereto, if any, without fail and to undertake investment at their own decision and responsibility.

7VII. Acquisition Schedule
Contract Date

August 31, 2015

Settlement and Acquisition Date

September 30, 2015

VIII. Future Outlook
The acquisition’s earnings impact in the current fiscal period (May 1, 2015 – October 31,2015) is minimal. Therefore, there is no revision to the forecast for the period that wasannounced on June 16, 2015.

Website of Ichigo REIT: www.ichigo-reit.co.jp/english

Disclaimer: This translation is for informational purpose only. If there is any discrepancy between the Japanese version and the English translation, the Japanese version shallprevail. This document is an English translation of a press release for the public announcement regarding the asset acquisition by Ichigo Real Estate Investment
Corporation, and has not been prepared for the purpose of solicitation of investment. We caution investors to refer to Ichigo REIT’s prospectus and notice of
amendments thereto, if any, without fail and to undertake investment at their own decision and responsibility.

8Reference: Post-Acquisition Portfolio Summary
Beforeacquisition (A)After
Acquisition (B)

96.1%

96.1%

21.8 years

21.8 years

85.4% /14.6%

85.5% /14.5%

Occupancy(As of July 31, 2015)
Average Building Age1
(As of August 31, 2015)
Location (Tokyo/Other) 2
1
2

The average building age is the weighted average based upon acquisition price.
“Tokyo” refers to “Central Tokyo” and “Tokyo Metropolitan Area.” “Other” refers to “Four
Major Regional Cities” and “Other Regional Cities.” The percentage is based uponacquisition price.

Reference: Post-Acquisition Portfolio Assets

No.

PropertyArea

1

Acquisition% ofPrice2
Portfolio3(mm yen)

O-02 Ichigo Nishisando Building

Central Tokyo

3,254

2.0%

O-03 Ichigo Mita Building

Central Tokyo

2,740

1.7%

O-04 Ichigo Nanpeidai Building
O-05 Ichigo Hanzomon Building

Central Tokyo
Central Tokyo

1,920
1,550

1.2%
0.9%

O-06 Ichigo Hijirizaka Building

Central Tokyo

1,200

0.7%

O-07 Ichigo Shibuya Kamiyamacho Building

Central Tokyo

1,505

0.9%

O-08 Ichigo Akasaka 5 Chome Building

Central Tokyo

735

0.4%

O-09 Ichigo Shibakoen Building

Central Tokyo

1,100

0.7%

O-10 Ichigo Ebisu Nishi Building

Central Tokyo

1,917

1.2%

O-11 Ichigo Ginza 612 Building

Central Tokyo

1,773

1.1%

O-12 Ichigo Uchikanda Building

Central Tokyo

1,140

0.7%

O-14 Ichigo Yotsuya 4 Chome Building

Central Tokyo

550

0.3%

O-15 Ichigo Tameike Building

Central Tokyo

580

0.4%

O-16 Ichigo Jimbocho Building

Central Tokyo

1,820

1.1%

O-17 Ichigo Hakozaki Building

Central Tokyo

1,150

0.7%

O-18 Ichigo Kudan 2 Chome Building

Central Tokyo

763

0.5%

O-19 Ichigo Kudan 3 Chome Building

Central Tokyo

844

0.5%

O-20 Ichigo Gotanda Building

Central Tokyo

5,060

3.1%

O-21 Ichigo Shin Yokohama Building

Tokyo Metropolitan Area

1,816

1.1%

O-22 Ichigo Minami Ikebukuro Building

Tokyo Metropolitan Area

1,460

0.9%

O-23 Ichigo Nakano North Building

Tokyo Metropolitan Area

764

0.5%

O-24 Ichigo Eitai Building

Tokyo Metropolitan Area

1,490

0.9%

O-25 Ichigo Yokosuka Building

Tokyo Metropolitan Area

971

0.6%

Disclaimer: This translation is for informational purpose only. If there is any discrepancy between the Japanese version and the English translation, the Japanese version shallprevail. This document is an English translation of a press release for the public announcement regarding the asset acquisition by Ichigo Real Estate Investment
Corporation, and has not been prepared for the purpose of solicitation of investment. We caution investors to refer to Ichigo REIT’s prospectus and notice of
amendments thereto, if any, without fail and to undertake investment at their own decision and responsibility.

9

No.

Area1

Property

Acquisition% ofPrice2
Portfolio3(mm yen)

O-26 Ichigo Ikejiri Building

Tokyo Metropolitan Area

2,030

1.2%

O-27 Route Ikebukuro Building

Tokyo Metropolitan Area

639

0.4%

O-28 Ichigo Nishi Gotanda Building
O-29 Ichigo Kichijoji Building

Central Tokyo
Tokyo Metropolitan Area

765
2,160

0.5%
1.3%

O-33 Ichigo Meieki Building

Four Major Regional Cities

837

0.5%

O-34 Ichigo Sakae Building

Four Major Regional Cities

4,705

2.8%

O-37 Ichigo Marunouchi Building

Four Major Regional Cities

6,710

4.1%

O-38 Ichigo Toyamaeki Nishi Building

Other Regional Cities

1,650

1.0%

O-39 Ichigo Mirai Shinkin Building

Other Regional Cities

1,158

0.7%

O-40 Ichigo Saga Building

Other Regional Cities

659

0.4%

O-42 Ichigo Takamatsu Building

Other Regional Cities

3,010

1.8%

O-44 Akita Sanno 21 Building

Other Regional Cities

560

0.3%

O-46 Ichigo Kanda Nishikicho Building

Central Tokyo

2,130

1.3%

O-47
O-48
O-49
O-50

Central Tokyo
Four Major Regional Cities
Central Tokyo
Central Tokyo

5,500
1,940
2,210
1,905

3.3%
1.2%
1.3%
1.1%

O-51 Ebisu Green GlassCentral Tokyo

5,900

3.6%

O-52 Ichigo Omori Building

Central Tokyo

3,850

2.3%

O-53 Ichigo Takadanobaba Building

Central Tokyo

1,580

1.0%

O-54 Ichigo Omiya Building

Tokyo Metropolitan Area

3,430

2.1%

O-55 Ichigo Sagamihara Building

Tokyo Metropolitan Area

1,174

0.7%

O-56 Ichigo Ofuna Building

Tokyo Metropolitan Area

2,000

1.2%

O-57 Ichigo Sendai East Building

Other Regional Cities

1,840

1.1%

O-58 Ichigo Kumamoto Building

Other Regional Cities

1,450

0.9%

O-59 Ichigo Jingumae Building

Central Tokyo

7,200

4.3%

O-60 Ichigo Shibuya Dogenzaka Building

Central Tokyo

3,650

2.2%

O-61 Ichigo Hiroo Building

Central Tokyo

3,960

2.4%

O-62 Ichigo Sasazuka Building

Central Tokyo

4,780

2.9%

O-63 Ichigo Nihonbashi Building

Central Tokyo

4,700

2.8%

O-64 Shuwa Dai 2 Building

Central Tokyo

2,500

1.5%

O-65 Ichigo Shinkawa Building

Central Tokyo

2,360

1.4%

O-66 Ichigo Kudan Building

Central Tokyo

3,190

1.9%

O-67 Ichigo Higashi Gotanda Building

Central Tokyo

3,660

2.2%

O-68 Axior Mita

Central Tokyo

1,800

1.1%

O-69 Ichigo Higashi Ikebukuro Building

Tokyo Metropolitan Area

4,570

2.8%

Ichigo Akiharaba North Building
Ichigo Sakaisuji Honmachi Building
Ichigo Kanda Ogawamachi Building
Ichigo Hatchobori Building

Disclaimer: This translation is for informational purpose only. If there is any discrepancy between the Japanese version and the English translation, the Japanese version shallprevail. This document is an English translation of a press release for the public announcement regarding the asset acquisition by Ichigo Real Estate Investment
Corporation, and has not been prepared for the purpose of solicitation of investment. We caution investors to refer to Ichigo REIT’s prospectus and notice of
amendments thereto, if any, without fail and to undertake investment at their own decision and responsibility.

10

No.

Acquisition% ofPrice2
Portfolio3(mm yen)

Area1

Property

O-70 Koriyama Big-i (Office Section)

Other Regional Cities

1,660

1.0%

O-71 Ichigo Kawasaki Building

Tokyo Metropolitan Area

1,750

1.1%

Subtotal - Office (61 Properties)
Central Tokyo
Central Tokyo
Central Tokyo
Central Tokyo

141,674
1,360
701
946
1,970

Z-03 Burg Omori

Tokyo Metropolitan Area

3,218

85.5%
0.8%
0.4%
0.6%
1.2%
1.9%

Z-04 Pagoda Asakusa

Tokyo Metropolitan Area

1,640

1.0%

Z-05 Regalo Building

Tokyo Metropolitan Area

1,310

0.8%

Z-06 Ichigo Yokohama Nishiguchi Building

Tokyo Metropolitan Area

903

0.5%

Z-07 El Centro Sapporo

Four Major Regional Cities

558

0.3%

Z-08 Daimyo Balcony

Four Major Regional Cities

638

0.4%

Z-09 Konami Sports Club Izumi Fuchu
Ichigo Shibuya Bunkamura Dori
Z-10
Building
Twicere Yokohama Isogo (Retail
Z-11
Section)Z-12 Lions Square Kawaguchi
Ichigo Shin Yokohama Arena Dori
Z-13
Building
Z-14 Ichigo Kamata Building

Other Regional Cities

1,210

0.7%

Central Tokyo

2,400

1.4%

Tokyo Metropolitan Area

1,620

1.0%

Tokyo Metropolitan Area

2,430

1.5%

Tokyo Metropolitan Area

1,700

1.0%

Tokyo Metropolitan Area
Subtotal - Others (16 Properties)
Total (77 Properties)

1,400

0.8%

24,004
165,67814.5%
100.0%

1,000

－

1,000

－

2,000

－

R-04
R-06
R-09
Z-02

Bureau Takanawadai
B-SITE Hamamatsucho
Ichigo Serviced Apartments Ginza
Fiesta Shibuya

Motoazabu Holdings GK TK Equity Interest
Investments
Ikenohata Holdings GK TK Equity Interestin Securities
Total
1“Central Tokyo” refers to Chiyoda, Minato, Chuo, Shinjuku, Shibuya, and Shinagawa Wards.
“Tokyo Metropolitan Area” refers to Tokyo (excluding the six wards above), Kanagawa, Chiba,
and Saitama Prefectures. “Four Major Regional Cities” refers to Osaka, Nagoya, Fukuoka, andSapporo.
2
Acquisition Price is the acquisition price (excluding consumption tax). For the 42 assets (O-02
to O-44 and Z-02 to Z-08) acquired via the REIT merger on November 1, 2011, the appraisal
value as of October 31, 2011 is shown.
3% of Portfolio is based upon acquisition price.

Disclaimer: This translation is for informational purpose only. If there is any discrepancy between the Japanese version and the English translation, the Japanese version shallprevail. This document is an English translation of a press release for the public announcement regarding the asset acquisition by Ichigo Real Estate Investment
Corporation, and has not been prepared for the purpose of solicitation of investment. We caution investors to refer to Ichigo REIT’s prospectus and notice of
amendments thereto, if any, without fail and to undertake investment at their own decision and responsibility.

11